Our sister site, www.shortdata.ca has published an update on Relay Medical, worth the read:
Short Squeeze Alert #2 for Relay Medical (CSE: RELA) - Evidence of Market Manipulation
Investment thesis remains, COVID-19 is not going away any time soon & RELA is busy signing deals left and right
In the last two months, many “COVID-19” stocks have sold off, and the category of “reopening stocks” had their day in the sun due to vaccine rollouts. However, investors do not seem to understand the slow rate of worldwide mRNA injections, or the reluctance of a large segment of the population to take the mRNA doses. We’re not here to debate vaccine merits, we’re here to objectively observe, bet, and make money, and when we see something egregious, send it out to our subscribers.
What's happening to our favourite COVID-19 deal? Company performance vs. stock price is inverted...
Our favourite short squeeze stock from September to February, Relay Medical, (CSE:RELA) went from 0.23 to a high of 0.93 cents on February 24th (if you’re new to this newsletter, we’ve linked the original email alert at the bottom of this note). It looked like we had obliterated the naked shorts who were forced to cover. Then the stock consolidated a bit on profit taking, in the 0.60-0.70 range. With recent positive news of additional roll outs, RELA looked poised to break out once again, but instead, RELA seems to be under attack by one or more bot trading algos manipulating the share price down. It has been beyond blatant to anyone watching the depth charts in the past 4 trading sessions. It might have started up to 7 trading sessions ago. Take a look, and notice the volume and number of transactions spike more than doubling, then quadrupling.
For the past 4 trading sessions, 500, and 1000 share market sell orders have been rapidly pounding the tape. We mentioned in our September report on RELA that German short sellers had targeted the Company. Maybe they didn't learn their lesson the first time, and it's the same guys who got their heads handed to them once the company began to sign deals. The only other explanation would be a Canadian brokerage is shorting the deal, betting that those who financed the company in January will be selling in May when those shares are free trading. If our thought process is right on this deal, within 6 months, RELA could be cashflow positive, and well on their way to raking in millions each month. Remember, THIS IS A ROYALTY DEAL, so once Fionet is everywhere recording test results, the vast majority of the revenue comes as free cash flow, with very few costs.
Let’s recap why RELA is our COVID-19 bet, and highlight the achievements of this company. Let’s also reiterate why RELA remains the best solution to testing and tracing:
There is no dilution on the horizon, the company has $10 million in the bank and is not raising money. The burn rate is low as well, less than 500k per month currently, so that box is checked.
Life Labs deal... WOW did the market get this wrong. Relay just signed a deal for mass rapid COVID-19 testing to be rolled out with Life Labs across Canada. From the press release, "LifeLabs will provide the Fionet platform in community-based settings at multiple sites across Canada, including airports, pop-up labs and installations for small businesses. The Fionet platform is integrated into LifeLabs's laboratory information system, ensuring seamless interoperation, as well as into LifeLabs' turnkey, end-to-end COVID-19 rapid diagnostic testing (RDT) program to support Canadians as they return to work." THEY MENTIONED CROSS-COUNTRY AIRPORTS! They are Canada's oldest lab testing company, and have over have 380 locations for testing across the country already, and they’re growing. This deal alone has the potential to make the company cash flow positive, and RELA is just getting started. From Life Labs' own press release on the subject, they added medium and large size businesses for pop up testing sites. This is a company who does over 100mil tests overall per year, and we're just talking about Canada so far, at this rate, RELA is bound to go global. Life Labs has almost $1 billion USD per year in revenue, this means RELA is playing with the big boys now! If that company did their research and love FIONET as the best solution, what more proof of concept do investors need?
The Pearson Airport deal is going well, and we believe it’s going to lead to additional airport deals in Canada in locations where Life Labs don't have the contract. Again, potential upside for millions in royalties each month as more and more travelers pass through airports again. If RELA is able to get deals with US airports, money starts rolling in exponentially.
RELA is now targeting cruises. Ships operate in tight quarters, and passengers need to prove they’re COVID-19 free. With the additions of Bernard O'Brien, Keith Davis and Donal Smith to the board of advisors, who have stock options in the deal, don’t be surprised to see Cruise line deals pop up on your newsfeed for RELA in the future.
Even if COVID-19 levels drop, you’re still going to have to take tests to travel for years to come, and RELA has the best recording device for any rapid tests available. So, RELA shareholders have a good shot at ringing the COVID-19 test royalty register 24 hours a day, everyday, at every point of entry location for the foreseeable future.
Clark Kent, the company’s low key financial Superman, has started buying in the open market. Who knows more about what deals are in the pipeline for RELA? The thesis for us was, one success will lead to another, and another, and there would be a snowball effect of Fionet being rolled out everywhere, cause its adaptable to any and all COVID-19 tests. So far the thesis is running on schedule.
The past 6 months have been great for RELA as a business, and if they continue on this trajectory in terms of deal making, the greedy blue sky reward would be a big board listing or company buyout by a testing giant.
If we’re right and the last 4 days were short sellers trying to manipulate the stock again to scare people into selling, then these shorts are in for Round 2 of pain. For full disclosure, we’re with Clark, and we’re buying at these levels over the next few weeks. The next step is to bring this idea to some big players. The boys at wallstreetbets should love this one, because if short manipulators are betting against deals like Relay Medical, who are trying to give us back some semblance of normal life, those shorts deserve to be squeeeeeeeeeezed, AGAIN.
Happy trading,
ShortData.ca Research Team |
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